Top 10 Worst Credit Card Mistakes You Can Make

Owning a credit card offers many advantages when it comes to paying bills, gas, clothing, and other items that you need. However, they need to be handled with care otherwise you might find yourself with so much debt that you cannot pay your way out. For many people who find themselves in this situation, it usually starts with a single mistake that is not corrected until it is too late.

By understanding the different types of mistakes that you might make with your credit card, you can avoid getting yourself in a situation that becomes too much to handle. What follows are the top 10 worst credit card mistakes that you can make.

Missing a Payment
Certainly one of the most common mistakes is missing a payment which causes your interest rates to go up and makes it more difficult to make the next payment. This can lead to circumstances that spiral out of control which will quickly put you in a position of not being able to pay your debt.
Start by setting up and automatic payment from your bank so you don’t forget and keep the balances reasonable so you can pay them off. If you find yourself without the money to make the next payment, call the credit card company and see what can be worked out. It’s better to address it before you miss than afterwards.

Maxing Out Your Credit Card
This is another common mistake that will lead to you not having enough to make emergency payments when needed. However, by maxing out your card you will face higher minimum payments and can be caught short when you need to pay something important.
The solution is a simple one, never max out your credit card. Always keep the balance as low as possible so that you can have the cushion needed in case you need to make an emergency payment.

Making the Minimum Payment
While paying the minimum amount is better than nothing, it will not lower your debt on the credit card for a long period of time. If you have a high balance paying the minimal amount each month means it could take decades before the balance is erased assuming that you do not use the card again.
Instead, make payments above the minimum amount so that you can reduce the balance as quickly as possible. Even paying 20% more than the minimum can shave off a considerable amount of time to fully paying off your credit card.

Carrying a Balance
When you first get a credit card, carrying a balance is a good idea as it helps you build up your credit score. However, once you have established that you can pay your bills you should pay off the balance so that you can reduce your monthly payment and not have to pay high interest charges. Credit cards are meant to be used for times when you need to make payments higher than what you have on hand. By carrying a balance, particularly a high one you run the risk of building up more debt than you can handle.

Not Being Strategic with Using Your Credit Card
This means not using your credit cards wisely and making unnecessary purchases that only drive up your debt. Remember that for each payment you make on your credit card, the debt will be subject to a high interest rate which can add up over time. By not being strategically smart in using your credit cards, you can rack up a considerable balance which may be difficult to pay off.

Instead, only use your credit cards purchases that are not appropriate for debit cards or cash on hand. By limiting the use of your credit cards, you can save a considerable amount of money over time.

Failing to Check Your Statement
It’s pretty easy to let your balance get away from you by ignoring the statements. Check them every month even if you do not use your credit card to ensure that the bill is accurate. Also, check to see if your interest rate has gone up as you might want to switch credit cards if that is the case.

Taking Out a Cash Advance
You pay additional fees when taking out a cash advance, so be very careful about using your card in this manner. About the only time when it is appropriate is if you need to make a cash-only payment and you do not have the cash in your bank account. Otherwise, avoid the cash advance as you are paying more for this service than just using the credit card to make the purchase.

Paying Medical Bills
Medical bills can be considerable and using your credit card to pay them will rack up a considerable amount of debt quickly. Instead, get a payment plan from the place where you received treatment and use your bank account to pay it off month by month. Using your credit card only means paying far more than what is owed due to the interest rate and how it pushes your credit limit.

Ignoring Rewards
Remember, you are paying for the rewards that your credit card brings, so use them when you can. Otherwise, you are far better off paying a lower rate for a card that does not have any rewards attached. By not taking advantage of what is being offered, you run the risk of not getting good value from your rewards plan.

Chasing Rewards
Conversely, many credit card rewards require an extraordinary use by you in terms of making payments which can put you in a real financial hole. Be sure to examine each reward and the effort it takes to make it pay off so you can see if the effort will really be worth it. For example, if your credit card has flight reward points, see if it would be cheaper to simply save up for the flight from the money you save by not using the card. Quite often, rewards are not worth chasing on your credit card.

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